Use Someone Else’s $$ To Buy a Multi-Family Property

So today I thought I'd talk about a term we've heard a lot of lately: it's called house hacking. And basically how we can use someone else's money to help you pay your first mortgage. With the price of houses going up and making houses harder to afford, you can get help by paying your first mortgage, and let me give you an idea of what that looks like.

It would be buying your first multi-unit property. That could be a duplex, which is a two unit property. A triplex, which is a three unit property. Or a fourplex, which is a four unit property. If you live in one unit, You can qualify for a low down payment as little as three to three and a half percent, but you can have one to three other tenants in the dwelling, in the house or units, helping you pay off your mortgage.

The great news about this is the rental income is based on the lesser amount of what the appraiser tells us is the going rate for the market, or the actual lease agreements. If it's already leased out and renter is in place. That additional lease amount or rental income can be used as a percentage of your housing expense and help you qualify.

So for easy math, if we were buying a duplex and the unit you were going to occupy was leased out for a thousand a month, and the appraiser also agreed the going rate was a thousand a month. The lender will give you 75% of that number towards income. So basically, you would get $750 in positive income to help offset that dwelling purchase or home purchase.

A very important item to mention is typically a two to four unit properties or connected with one roof. They're not separate from one another. It's one roof one general plumbing system. But they typically will have to qualify separate electric meters so that those separate tenants are paying their own electric bill.

Anything over four units typically doesn't qualify for traditional residential financing with the lower down payments and is generally considered commercial at that point. So up to four units you're typically safe for this method.

If you've been contemplating buying your first home, trying to figure out if you can afford it or maybe want to see how to buy a multi-unit property as your first property or second property, even at that, please give us a call. We're happy to help! Thanks so much.